Monday, July 24, 2017

Readers Respond: Measuring the Unmeasurable

Issue #946

I was reading the good piece about trying to get reasonable numbers on software product revenue. I can empathize with the challenge, because I was involved for many years (and even led efforts) in trying to guesstimate our competitors’ revenues by product, industry, and geography. I did this as an executive at MSC, Fluent, Engineous, Blue Ridge Numerics, and CD-adapco. I also did similar research as a consultant to CIMdata a few years ago and on my own in and around those other efforts. So I was struck by the statement below:

“We can then triangulate by product (easy to do, as public companies publish their results)”

I know from my own efforts (and being a corporate officer at a public company, MSC, from 1990-97) that public companies usually don’t publish their results by product line/name, only overall revenue by quarter and sometimes by geography and major business division. As Monica Schnitger wrote on February 9, 2016:

“When Dassault Systemes reports results, there’s a blizzard of information to wade through, all carefully orchestrated to lead the reader to the desired conclusion: that DS is a healthy, growing business with activities on many fronts contributing to long-term success. We get a lot of useful information, but many questions remain unanswered such as how are SIMULIA and DELMIA doing?”

So I wonder if the “easy to do” is Peter Thorne's statement or Ralph's interpretation? Either way, it’s questionable. However, my comments here are not meant to distract in any way from the generally high-quality efforts of Cambashi and upFront.eZine.

Compared to some market research charlatans (we’ve all seen their ads or postings on LinkedIn) who claim without hesitation that the FEA market in [fictional] Lower Slobovia will grow 10.283% between 2017 and 2020 and we should order their $1,500 report for all the details, your work is excellent.

I recall an anecdote from when a consulting firm paid a Chinese market research supplier to provide a report on the PLM market in China. In that report, there happened to be data on CD-adapco’s revenue in China. Since I was with CD-adapco as vice president until Jan. 1, 2011, I was amazed that the Chinese PLM report had CD-adapco China revenue numbers at a level of detail that even we at CD-adapco didn’t have!. - Dennis Nagy BeyondCAE

Peter Thorne of Cambashi replies: Dennis is correct, I said 'easy', but I was exaggerating, as it’s not easy and some of my Cambashi colleagues have also pointed this out to me! However, it is easier than some of the other drill downs and Sudoku-like constrain-and-converge steps.

One thing that helps is that we have a model for every major supplier, and each model has absorbed snippets provided by the supplier over the years. This doesn't mean a supplier’s five-year-old statement at a presentation in Singapore of A&D as a share of business in APAC [Asia-Pacific] is some kind of fixed point, but that statement will have influenced our model, and by adding these snippets in, it does mean we’ve got continually evolving supplier models into which we expect to fit this year’s figures.”

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There's nothing easy about creating market numbers. Even if companies report data by product, geo [geoggraphy], seats, and units, they're often self-inconsistent over time and there's certainly inconsistency from vendor to vendor. Whenever a company releases this type of data, it needs to be viewed as marketing:

What message are they trying to get across?

Does a number of units include commercial, educational, both?

What's in a product category and how are bundles handled?

This type of data should be suspect, because there are no clear definitions. What Cambashi brings (and what I tried to do at Daratech) is a set of definitions that don't change across vendors or time. It's very hard to do, and I appreciate the deep sanity-checking Cambashi does. It's the only way to even approximate something meaningful.

I wrote that paragraph [referenced by Mr Nagy] about Dassault Systemes after one of their earnings releases. It's frustrating when a vendor creates a bucket of random things simply to show growth. Dassault's "Other" category includes BIOVIA, CST, DELMIA, SIMULIA, Quintiq, and its other smaller brands. It's not clear which products grew during the period, or by how much.

Of course, Dassault isn't alone in this; others also define categories to create their desired perception. It's a trend that's not merely annoying to industry analysts, but dangerous for investors because they don't really know what they're buying. Yes, there may be overall growth but it's important to know what's driving the growth to assess how likely it is to continue. Investors are always buying future performance [which determines the current stock price]. -Monica Schnitger, principal analyst Schnitger Corp.

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Interesting reading how Cambashi does what they do: gathering data, triangulating, adjusting as they learn about numbers that don’t appear to match. Cambashi is very, very good at what they do. -Jim Quanci Autodesk

And Now the Rest of the News...

IntelliCAD Technology Consortium quickens the pace of releases, with IntelliCAD v8.4 out just four months after v8.3. New in IntelliCAD v8.4 are the following functions: multileaders, quick leaders, break lines, select similar, get selection, explode text, explode attributes, more MText formatting options, auto numbering, and drawing properties. Drag'n drop is now possible in the Customize dialog box. And they added support for IFC, and improved handling of DGN files. http://www.intellicad.org

(You have to be a member of ITC and ODA respectively to take advantage of IntelliCAD and Teigha. Members then decide whether to integrate the new functions into their software sold to end users.)

Siemens PLM Software launches a new Automotive Solution, sounding a lot like PTC: "unites ALM with PLM" to combine embeddedhttps://www.plm.automation.siemens.com/en/automotive-transportation/automotive-software-development/index.cfm software and physical systems. (ALM is Application Lifecycle Management.) But then sounding a lot like Dassault, Siemens also says that in the coming months it will launch a series of solutions aimed at a wide variety of industries. https://www.plm.automation.siemens.com/en/automotive-transportation/automotive-software-development/index.cfm

Cenit of Germany acquires majority ownership of Keonys of France to become the largest Dassault VAR. But wait, there's more... Cenit AG also acquires majority interest in SynOpt GmbH, based in Leinfelden-Echterdingen and its simulation solutions for SIMULIA.

Meanwhile, in the world of IoT [Internet of Things],Intel is axing 140 staffers as it scales back its IoT operations after canceling Galileo, Joule and Edison modules. It seems that all Intel is successful at is making CPUs and only 8086-compatible CPUs.

For late-breaking CAD news, follow upFront.eZine on Twiter at @upfrontezine.

Letters to the Editor

Re: Big Data

I just said to someone the other day that we're living in times when people are so disconnected from reality that fantasy rules! But then, who's going to farm, invent, and fix things?

The editor replies: My wife's best friend married a farmer in Alberta, who with just his sons and sons-in-law does grain farming on nearly a thousand acres, including hundreds leased from retired farmers. I am astounded at what he does -- and puts up with.

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